The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.01.2020.  There will be an increase of 4 percent over the existing rate of 17 percent of the Basic Pay/Pension, to compensate for price rise.

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be ₹ 12,510.04 crore per annum and ₹ 14,595.04 crore in Financial Year 2020-21 (for a period of 14 months from January, 2020 to February, 2021). It will benefit about 48.34 lakh Central Government employees and 65.26 lakh pensioners.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

Dearness Allowance increase approved, additional instalment extended to central employees and pensioners effective January implementation. Approval was granted for release of an additional instalment of Dearness Allowance and Dearness Relief with effect from 1 January 2020, increasing rates to compensate for price rise for Central Government employees and pensioners, implemented pursuant to the accepted pay commission formula and producing a quantified annual exchequer impact for the specified financial period.